People who don’t make their mortgage payments on time may receive a letter from their lender letting them know that their property is going into preforeclosure. Those who do not take action run the risk of losing their homes for good.

This predicament can be devastating, both emotionally and financially.

While preforeclosure is a term that should never be underestimated, as it can lead to a serious situation, there are ways people can recover with a house in this state.


What Is Preforeclosure?


Preforeclosure, simply put, is the very first step in the process of foreclosure. The preforeclosure process provides homeowners with a few options to remain in their homes before they go into foreclosure.

Preforeclosures happen when homeowners fail to make their mortgage payments on time. When lenders don’t receive payments, they issue default notices. Default notices are legal notices that alert homeowners that lenders have started the legal foreclosure process.


How Does Preforeclosure Work?


There are typically a few steps in the preforeclosure process. The first step in the process usually begins when people miss their monthly payments. When you take out a mortgage after purchasing a home, the agreement you sign states that you will make monthly payments toward the balance on the loan.

If you miss or are late with any of these payments, you violate your agreement you made with your lender.



The next step of the preforeclosure process is the default step. When you miss three months of mortgage payments, you go into default. For lenders, the foreclosure process can be very costly. If they can avoid it, they will.

Lenders often work with homeowners to delay payments, lower payments, or completely restructure the loan. Homeowners typically have a few options if they need some assistance with their mortgage payments. Foreclosure mediation is a great example of one solution.


Notice of Default


After about 6 months of missed payments without any solutions underway, homeowners will receive a “Notice of Default,” which is a legal notice letting the homeowner know that the lender will take legal action if they do not pay their debt.

Lenders send this notice to the County Recorder. They also may file a lawsuit with the court. The Notice of Default is where the preforeclosure process truly begins and it can last up to 10 months.




The goal of the bank is to get any money a homeowner owes on the property. Homeowners who continue to avoid payments will usually have their homes taken to auction. The minimum bid at auction will be the amount the person owes on the loan.

A home in foreclosure is then sold to the highest bidder, forcing the current homeowner to move out.


Escaping Preforeclosure


If your home has recently gone into foreclosure, you have plenty of options, including catching up on missed payments, conducting a short sale, considering a loan modification, or getting a deed in lieu of foreclosure.


We hope that this article has given you a better idea of preforeclosure. If you’re worried about preforeclosure, your best bet is to speak with a mortgage expert and tell them about your specific situation.